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We are pleased to present a copy of our 2023 / 2024 Executive Change in Control Report. This report analyzes change in control arrangements among 100 companies in the S&P Composite 1500 Index. This year, we partnered with ESGAUGE in understanding the current environment regarding executive change in control arrangements. Because your company is included in this report, we thought you might find the report of interest.
Attention continues to be placed on “golden parachute payments” made to executives in connection with corporate transactions. These payments can be sizeable and trigger substantial excise taxes and lost deductions under Internal Revenue Code Sections 280G and 4999. This report identifies market trends with respect to executive change in control arrangements in order to help companies evaluate their practices against their peers.
Key findings include:
- Average change in control payments remain substantial, averaging ~$23.1M for CEOs and ~$7.5M for CFOs.
- The most common cash severance multiple in connection with a change in control is between 1.99 and 2.99 times compensation (60% for CEOs and 42% for CFOs).
- The prevalence of double trigger vesting for equity awards remains high, utilized by 88% of companies.
- Accelerated vesting of equity awards continues to be the most substantial CIC payment, representing, on average, 63% and 58% of the CIC payments for CEOs and CFOs, respectively.
- Best-net provisions continue to be prevalent, appearing in ~40% of all CIC arrangements studied. Additionally, we observed this provision in 60% of the top 10 deals during 2022.
When designing compensation programs, the potential impact of the Golden Parachute rules should be considered. As soon as the company determines that a CIC may be on the horizon, it should take steps to understand the impact of the Golden Parachute rules on both the company and the executives.
We’re most interested in your feedback. If you have any comments or questions, please contact any of our Compensation & Benefits Practice Managing Directors.
Related Insights
Alvarez & Marsal's (A&M’s) Compensation and Benefits Practice is pleased to share the results of its 2021/2022 Executive Change in Control Report.
Alvarez & Marsal's (A&M’s) Compensation and Benefits Practice is pleased to share the results of its 2019/2020 Executive Change in Control Report.
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